Invention Journal of Research Technology in Engineering & Management (IJRTEM)

ISSN: 2455-3689
www.ijrtem.com Volume 1 Issue 12-Version-4 ǁ December. 2017 ǁ PP 19-21

Compensation Practices On Employee Motivation As Impact On

Arya Systems
Jyothsna M1
1
(MBA, Osmania University, India)
ABSTRACT : In this changing scenario compensating the employees according to the performance and which
motivates them is the priority and right of employees. There is a strong link between compensation practices
and employee motivation. The paper is an effort to determine the relationship between compensation practices
and employee motivation in Arya Systems. The variables which have impact on employee motivation are wages
& salary, working hours and promotion system. The objective of this research paper is to analyze compensation
practices practices required to retain employees and maintain them. The main aim of this Research paper is to
study compensation practices and related aspects and to know the impact of compensation practices on
employee motivation in Arya systems. The research paper makes use of structured questionnaire administered
to the selected respondents for data collection has been done. The results revealed that there is positive
relationship between compensation practices and employee motivation. The rank analysis showed that the
factor which contributes more to the employee motivation is job security of employees whereas promotion
system results in more satisfaction.

KEYWORDS: Compensation Practices, Employee motivation.

I. INTRODUCTION
Human Resource Practices is an integral function of an organization which needs focus on many factor including
compensation, retention, performance appraisal and quality of work life, but by far compensation has strong
relation with employee motivation.

Concept of Compensation Practices :“Compensation refers to all forms of financial returns and tangible
services and benefits employees receive as part of employment relationships1 Compensation comprises of all the
benefits provided to employees in return of the services given by employees. Compensation not only satisfies
employees but also motivates employees. Compensation is all about the financial and non- financial benefits
which are the rights of employees for their contribution to the organization. Compensation directly or indirectly
affects the performance of the employees. The different components of compensation makes employees feel that
they are secured and working under a better organization that is fulfilling their needs. When the employees feel
secured and satisfied they perform better.

Concept of Motivation : Rensis Likert, in his book Motivation: The Core of Practices’, explained motivation as
“The core of practices which shows that every human being earnestly seeks a secure, friendly and supportive
relationship which gives him a sense of worth in face-to-face groups which are not most important to him. A
supervisor should strive to treat individuals with dignity and a recognition of their personal worth.” 2 As the
theory of Abraham Maslow explained Motivation is the drive of a person to carry out a task which he desires to
do so. Employee Motivation factors prevailing in Organization sector are:

Fair wage and salary: Salary is compensating the employees for their services and performance given to the
organization. Salary is an amount which employees get every month act as a motivation factor to satisfy their
needs.

Work environment: Organizational culture contributes more towards motivating the employee to perform
better. Relation with peers, superiors and practices plays an important role.

Recognition: Every time employee performs better need to be praised and recognized so that he/she gets
motivated to perform better and better. Organization have targets for employees if reached in a stipulated time
period the employee gets bonus.

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 Invention Journal of Research Technology in Engineering & Management

Performance linked practices and style: The practices should also have flexible policies related to
compensation. Private Organizations provide cab facility and mobile allowance are also motivation factors.

Non-cash benefits: organization provides Non cash benefits like promotion; job security, working hours, and
workplace flexibility are also some of the factors which motivate employees.

Relationship between Compensation Practices and Employee Motivation : Compensation practices have
two main factors i.e. monetary and nonmonetary incentives. Employees are not satisfied with either monetary or
neither non-monetary but the efficient use of both monetary and nonmonetary incentives. These motivation
factors can be working hours, salary and wages, benefits, perks performance appraisal and benefits.
Compensation practices is a dependent variable which motivates employees and has a positive impact which
contributes towards the achievement of organizational goals.

II. LITERATURE REVIEW

Douglas McGregor’s (1960) Theory X and Theory Y represent his ideas on motivation to the direction and
control of employees in the workplace. According to McGregor’s Theory X, which articulates the traditional
approach to motivation, people are not keen on work, and try to avoid it where possible. As a result, employees
must be coerced and controlled by punitive measures to perform effectively. The average person is believed to
lack ambition, avoid responsibility, and strive for security and financial compensation only. They are egocentric,
and not at all mindful of organisational goals. Theory Y, in contrast, reflects a more modern approach to
motivation. People seek responsibility, and are capable of creative problem solving. McGregor regarded Theory
Y as a more accurate and realistic portrayal of human behaviour, since it represents the integration of individual
and organisational goals. McGregor did, however, recognise that the theory does not offer a complete
explanation for employee motivation.

Gouws (1995) noted that McGregor’s theory closely resembles that of Maslow, in that the factors McGregor
believed act as motivators to people at work, are arranged and satisfied in a similar hierarchy. McGregor also
placed physiological needs first, followed by physical and social needs. Egotistical needs are sub-categorised as
self-regard needs on the one hand, which involve self-respect, self-confidence, autonomy, achievement,
competence and knowledge. On the other hand needs such as the status, recognition, respect and appreciation a
person enjoys. The highest level of need is that of self- fulfillment, which people attempt to satisfy through
continued self-development and creativity. Job satisfaction must be taken apart so that its elements can be
examined. The general idea is that each element can be measured and that the concept of job satisfaction is
simply the sum of its parts. Some of the facets that might be examined are compensation, working conditions,
security, variety, independence, advancement, responsibility, and achievement.

Motivation is an important function which very manager performs for actuating the people work for
accomplishment of objectives of the organization. Issuance of well conceived instructions and orders does not
mean that they will be followed. A manager has to make appropriate use of motivation to enthuse the employees
to follow them. Effective motivation succeeds not only in having an order accepted but also in gaining a
determination to see that it is executed effectively.

In order to motivate workers to work for the organizational goals, the managers must determine the motives or
needs of the workers and provide an environment in which appropriate incentives are available for their
satisfaction. If the practices is successful in doing so, it will also successful in increasing the willingness of the
workers to work. This will increase efficiency and effectiveness of the organization. There will be better
utilization of resources and workers abilities and capacities.

III. RELEVANCE OF THE STUDY

This paper is an attempt to analyze the different types of compensation policies used in Organization sector with
special reference to Arya systems and their impact on the employee's motivation. The study has tried to identify
the impact of bonus, basic salary, incentives, perquisites, short term and long term incentives on the motivation
and performance level of employees. It also helps to determine from these factors which factor motivates them
more. It also shows on what basis employees are compensated i.e. how the performance and job evaluation
methods are being implemented.

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 Invention Journal of Research Technology in Engineering & Management

IV. OBJECTIVES
• To study compensation management practices prevailing in Arya systems.

• To understand different factors of employee motivation in organization.

• To identify the linkage between compensation practices and employee motivation.

• To analyze the impact of compensation practices on employee motivation.

V. RESEARCH METHODOLOGY
The present study is exploratory as well as descriptive in nature. Both primary and secondary sources of data
collection have been used for collecting the data. Structured questionnaire has been administered for the purpose
of collecting primary data. The questionnaire was distributed amongst 50 respondents. The simple random
sampling method is used. The questionnaire was designed using 5 pointlikert's scale. Coding and tabulation was
done and data collected so was analyzed by using SPSS software. he introduction of the paper should explain the
nature of the problem, previous work, purpose, and the contribution of the paper. The contents of each section
may be provided to understand easily about the paper

VI. DATA ANALYSIS AND INTERPRETATION

Table 1.Demographic profile of respondents

.
Parameters Category Frequency Percentage
Age 18-27 13 26.0
28-37 18 36.0
38-47 11 22.0
above 48 8 16.0
Total 50 100.0

Gender Male 45 90.0

Female 5 10.0
Total 50 100.0

Marital Status Married 41 82.0

Unmarried 9 18.0
Total 50 100.0

Income Less than 10000 8 16.0

11000-33000 36 72.0
31000-50000 2 4.0
51000-70000 4 8.0
Total 50 100.0

Work Experience Less than one year 4 8.0

1-5 years 22 44.0
5-10 years 12 24.0
Above 10 years 12 24.0
Total 50 100.0

Inference: It is evident from the above demographic details of respondent that research has been conducted on
different parameters of respondents. As in the current study the total sample size is n=50.
Inference: From the above table it can be inferred that
Promotion is the major factor in Arya systems and it is ranked first by respondents. The next major factor is

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 Invention Journal of Research Technology in Engineering & Management

Performance reviews which and it is ranked second by the respondents. The factor which is ranked third by the
respondents is

Wages and salary. The next factor which is ranked fourth by the respondents is

Compensation system. Need for Compensation policies & working hours is ranked as fifth and sixth by the
respondents. The factor which is ranked seventh & eighth by the respondents is link between

Compensation & productivity and performance of employees.

Inference: From the above table it can be said that Job security is the major factor in Arya systems and it is
ranked first by respondents. The next major factor is Workplace flexibility which and it is ranked second by the
respondents. The factor which is ranked third by the respondents is Performance appraisal. The next factor
which is ranked fourth by the respondents is Recognition for performance. The Employee satisfaction &
Feedback of performance is ranked as fifth and sixth by the respondents.The factor which is ranked seventh by
the respondents is Total benefits package.

VII. LIMITATIONS OF THE STUDY

The research has been conducted on organization due to which sample size taken is very small. Employees were
not cooperative. Motivation level may differ from person to person.

Suggestions : The employees should be given proper allowance facility, salary and job security according to the
market trend. The objective of the organization should be linked with the objective of the individual so that both
the objectives are accomplished and employees feel motivated to work. The needs of the employees should be
determined and accordingly be accomplished by the organization through different motivational techniques. The
organization should make use of different non-monetary incentives also so the employees feel connected with the
Organization.
VIII. CONCLUSION
The research paper helps to arrive at a conclusion through the discussion and analysis of data the motivation is
an important aspect of employee’s job satisfaction. But to motivate the employees one of the important aspects is
compensation practices i.e. proper compensation policies. The results also showed that if the compensation
policies are managed effectively it will directly affect the motivation level of employees. It can be concluded
from the above results that variables which contribute to compensation practices are promotion system,
performance reviews and wages and salary. The factors which influence motivation level of employees in Arya
systems job security, workplace flexibility and performance appraisal

REFERENCES
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[2]. Likert, R. Motivation: The core of practices. American Practices Association. New York; 1953.
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University of Florida, 1998). Dissertation Abstracts International, 56-06A, 1862.
[4] Anantharaman, and shamsad Begum, (1982), “Job Involvement among Bank Employees,‟ Indian
journal of applied phycology, pp.1-19.
[5]. Armstrong Michael (2006). A Handbook of Human Resource Practices Practice 10th edition,
Cambridge, UK, University Press.
[6]. Beck, R.C. (1983). Motivation: Theories and principles (2nd ed.). New Jersey: Prentice Hall.
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policy model for the 1990s. New York New York: John Wiley & Sons, Inc.
[9]. Bong, M. (1996) ‘Problems in Academic Motivation Research and Advantages andDisadvantages of
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[10] Cropanzano, R. & Folger, R. (1996). Procedural justice and worker motivation. InR.M. Steers, L.W.
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